CYBER1 - Cyber Security in growth markets - Mangold Insight Analysis

Mangold updates Cyber Security 1 ("CYBER1") after the third quarter of 2023. CYBER1’s revenue increased to EUR 33.9 (30.6) million in the first nine months of the year compared to the same period last year. That represents a growth rate of 10.9 percent. Mangold has chosen to adjust down the growth rate given a lower growth than expected. Gross profit increased to EUR 7.3 (6.0) million during the same period, which corresponds to an increase of 22 percent. EBITDA amounted to EUR -0.76 (-2.61) million, which is a significant improvement over the previous year. However, it is lower than Mangold's estimate which has led us to adjust the margins down moving forward. Mangold continues to believe that CYBER1 will reach profitability (EBITDA) on a full year basis in 2023 driven by an expected strong fourth quarter.

Operating costs have fallen by 6.1 percent compared with the previous year. We see this as a clear sign that the company can improve its margins. This is even though the company made two acquisitions in the autumn of 2022. The cash amounted to EUR 0.5 million at the end of the quarter, corresponding to approximately SEK 5.7 million. Mangold believes that the cash is sufficient provided that the company meets our estimates.

Mangold reduces the Price target to EUR 0,045 (0,055) per share. For the price target to be reached, CYBER1 needs to continue improving margins and achieving profitability on a full-year basis in 2024, while continuing to grow at a high pace.